Market mood sours after downbeat economic news

FILE - In this Sept. 12, 2012 file photo, Michael O'Connor, right, of Getco Securities and a fellow trader work on the floor of the New York Stock Exchange in New York. Futures are edging higher Wednesday, Sept. 19, ahead of a pair of reports regarding the U.S. housing market that are expected to provide more hope for the beleaguered industry.

The mood in financial markets turned sour Thursday after a round of disappointing economic news illustrated the scale of the global economic downturn.

LONDON — The mood in financial markets turned sour Thursday after a round of disappointing economic news illustrated the scale of the global economic downturn.

Figures from Europe, Japan and China reminded investors that the world's economy is struggling, though a positive bond auction from Spain helped limit the retreat in markets.

Among the sobering news for investors was a survey in Europe pointing to a deepening recession in Europe, figures from Japan that showed the country's powerhouse export sector was continuing to suffer and a private survey of manufacturers in China that showed activity fell again in September, though at a slightly slower pace than August.

"The major concern is that .... equities will now find themselves struggling unless we see a step change in the health of the global economy," said Fawad Razaqzada, market strategist at GFT Markets.

In the wake of the figures, stocks suffered one of their biggest reverses in a while as the euro dropped below $1.30 for the first time in a week.

In Europe, the FTSE 100 index of leading British shares was down 0.6 percent at 5,852 while Germany's DAX fell 0.5 percent to 7,351. The CAC-40 in France was 0.8 percent lower at 3,503.

Wall Street was poised for a lower opening too, with both Dow futures and the broader S&P 500 futures down 0.3 percent.

Over recent weeks, stocks around the world have spiked sharply higher, while the euro headed above $1.30 for the first time since the spring — signs of increased optimism.

Markets were driven by a series of apparent breakthroughs in European leaders' efforts to solve the debt crisis and another monetary stimulus from the U.S. Federal Reserve.

So far this week, markets have largely treaded water despite a further monetary easing from the Bank of Japan and a continuing respite in Europe's debt crisis, evidenced by a further stabilization in the borrowing rates of euro countries like Italy and Spain.

"There have been clear signs this week that the shine has come off the summer's boost in optimism," said Jane Foley, an analyst at Rabobank International. "That said, these corrections remain modest in light of the moves registered since July."

The euro was one financial asset giving up some of its recent gains, trading 0.8 percent lower at $1.2946. This was despite Spain raising €4.8 billion ($6.2 billion) in a debt auction Thursday that saw strong demand and a drop in a benchmark interest rate.

Earlier, the losses in Asia were more acute than in Europe, largely because they enjoyed a stronger advance Wednesday in the immediate aftermath of the Bank of Japan's easing.

Popular Comments

LOL, and very disturbing. The state of the economy and wealth of the world has
declined so terribly that emotions and fear have taken over sound judgment and
control of wealth in the US and the world. Pathetic, and true sign of the times
and the fall
More..